Share Price Movement of Commercial Banks in Nepal

Abstract

The study investigated the variables influencing on share price movement in Nepalese commercial banks. It also identified the opinion of public on the influencing factors of share price movement in Nepal. To draw out the respective variables effects on share price movement in Nepal and find the effects of variables, this study used both primary and secondary data from different sources. The study design was descriptive research design. Convenience Sampling was used for the study. To find the primary data for the study, the set of questionnaires were used to collect data from respondents of this research and necessary secondary data were taken from the annual reports of samples banks of this research. Mean, Standard Deviation, coefficient of variance, correlation coefficients were performed to analyze the both primary and secondary data of this study. . The results revealed that many of the respondents still believe that there are still lots of influencing variables on share price movements, on the other hand most of the respondents were agreed on the movement of share price by political situation of country, earning per share, dividend distribution patterns, higher book value, share price, rules and regulations of Nepal Rastra Bank, financial aspects.. The study further shows the share price of commercial banks in Nepal is very fluctuating. It is a subject of curiosity to identify the factors affecting share price of commercial banks. The shares of commercial banks dominate the portfolio of majority of investors. So, this study examines the factors affecting share price movement of commercial banks over the period 2013/14-2017/18. The findings of the study over the past five-year period revealed that dividend per share and earnings per share, book value per share has the significant positive association with share price. From the secondary data analysis, it is found that the commercial banks performance is highly inconsistent in the relationship of MPS with EPS, DPS, DY, BVPS and PE ratio. Similarly, there are other environmental factors affecting the market price of share. Such environmental factors affecting the share price are the political situation of country, earning per share, dividend distribution patterns, book value, share price, rules and regulations of Nepal Rastra Bank and changing policy, financial aspects (assets, paid up capital etc.), government instability, SEBON performance. There exists significant relationship of EPS, DPS, BVPS, DY and P/E ratio with MPS.